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Stevenson 8, Chiu 8, Us 7, Joe Dimaggio 3, San Francisco 3, Campos 3, North Beach 2, Kim 2, Julie Christinsen 2, China 1, Columbus 1, Escambia 1, Olague 1, Meath 1, Mar 1, United States 1, Puc 1, New York City 1, City 1, The City 1,
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  SFGTV    [untitled]  

    November 13, 2012
    6:30 - 7:00pm PST  

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spaces to create a much more tenable expense stream for us, and stabilize our expenses of occupancy. so we have reduced that amount in 2009, we were down to 116,000 square feet and now we're at 81,400 square feet at 875 stevenson street. that property is right behind what's called 1355 market street, or what's been rebranded as market square, where trirt an --twitter and others have mod into. that resurgence has lit a fuse to move forward with new improvements by the ownership of both buildings, which is forcing the item before you today of an early exit from 875 stevenson. our current lease agreement allows us to remain on the premises until may of 2015.
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so the one agreement, that has us exiting, would call for an early exit by no later than february 4, 2013. in consideration for that early exit, we've negotiated a payment to cover the cost of the move itself, as well as the increased cost of occupancy because rental rates have increased since we struck the agreement at 875 stevenson. so that's sort of where we're at, and why we're leaving. the other question is where we're going. so we have, at 875 stevenson street our repromail operations, treasurer tax collector, assessor, recorder, business property division, department of public works, bureau of street use and mapping, human resources, department of public works and general services agency, as well as city attorney's office claims
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division. all within the footprint of 875 stevenson. the majority of those folks would move to one location, 1155 market street where we have negotiated a new lease. 1155 market street was the headquarters location of the sf puc. so you may recall they occupied both that building and the building next door at 1145 market street. so there's no confusion i'll refer to 1155 as the headquarters location. that building is owned by the lors corporation although you see the agreement is with a limited liability company that is a subsidiary of lors corporation recently purchased within the last two years. we've negotiated what we think is a favorable agreement that is of a term of 10 years at 1155 market street. we do have the right to exit after five years, or after 92 months. so we have two opportunities to
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decide if there is a better location, or part of a greater plan to consolidate services, we have those exit opportunities from 1155 market street. the initial lease rate is $31.67 a square feet. that jumps in the second year to 39.14 a square foot and then 3% increases per year. the reason for the big jump between year one and year two is that year one is included a few months of what's considered free rent, and the ownership preferred to simply blend that benefit over the term of the first year. included with that rate is a tenant improvement allowance of $25 a square foot and then ability to amortize or pay for over time a 35 dollar square
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foot tenant improvement allowance over the initial 10 year term. the second entry agreement to cover the relocation of repromail which was sought to be an inappropriate use at the office building of is 155 market we were fortunate enough to find a location at the intersection of 12th street and south van ness, 110 12th street also has an address of van ness. it would be single use, a little over 10,000 square feet in size. we believe it's ideally situated to service our repromail operations, has a small parking area/yard and ability for adequate loading and very approximate access to the civic center which is the main client base for repromail operations. that particular lease is a 10 year lease as well, with an exit any time after five years. so we have a continual right to exit the property after the
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fifth year. the initial rate there is $30.95 a square foot per year. that increases 4% per year. the last one let me speak to briefly the exit from 875 stevenson street, the terms of that agreement are that the city completely vacate the premises by no later than february 4, 2013. which we are primed to do. if we accomplish that successfully, we will receive payment, over all, two different payments but a sum of 3,250,000. so that's the consideration for the early exit. there is some fairly intense calculations in your board package that shows that that compensation adequately covers our physical cost to move. it covers cubicle refinishing, new cubicle acquisitions were
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necessary although we're pretty much moving around our exiting furniture. we're trying to make this a green efficient relocation. and covers most importantly the differential in the rent. for the rest of this fiscal year and the full term of next fiscal year. so the budget impact of this move is deferred to fiscal year 14-15. that's somewhat consistent with what we would have faced if we hadn't done this agreement. so but for this agreement we would remain at 875 stevenson street, where we do not have a renewal option, and in mai of 2015 we would have had to have found a location to move to. so we knew this day was coming. this accelerates that day but it brings to the table a fiscal partner to help ease the fiscal impact of the move. we speak to timing. so the reason this is before you, the nature that it is, as
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opposed to the normal course of a budget analyst review, budget and finance committee hearing, and then to the full board which frankly would have been my preference, is that we were squeezed, really, on both ends. so we had the ownership of 875 stevenson being very clear to us that that exit date of february 4 was firm, there was no negotiating that. once we negotiated the date we had, there was no extension possible. and there is a fiscal penalty for every day delay of our exit in this agreement. we will receive less money from shornstein for every day of delay. so if we leave on february 5, that will cost the city $10,000 in reduced revenue from that $3.25 million. it's $10,000 a day for the first week, $20,000 a day for every week thereafter. so clearly there is motivation for us to be timely in our exit.
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secondly, on the entry, there's only so many days between now and february 4, plus we have -- the worst time of the year to put this all together, during the holiday season. so when the construction schedule was coming together, many of these things working in parallel, we found that, because of the one week window next week, where we do not have a board meeting, that one week was absolutely critical from a standpoint of ordering furniture and other expenses that the landlord will front as is typical in a landlord-tenant agreement. the landlord will front money on an executed lease, but not on a non-executed lease. so reasonably so, we needed to get this item to this board to see the lease approved before further expenditures would be made by the landlord on our behalf, or really on their
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behalf in order to secure us as a tenant. so i hope that helps give a little perspective as to the timing. certainly happy to answer any questions you may have about any one of these three agreements. thank you for your time in allowing this process to go as it has. >> president chiu: colleagues, any questions to department staff? supervisor kim. >> supervisor kim: thank you. i had one quick question. this is the second time i've seen, in the lease, us using kind of a landlord advances to front the tenant improvements at an 8% enterrate. being that we're seeing this over and over again i think several of my colleagues has said this is very high if we do choose to participate, and this came up with the department of environment. i was wondering if the department of real estate is thinking in the future, if there are other ways that we can borrow money for these tenant improvements at a lower interest rate. >> well, that's a very good question, and it's timely. because we are seeing this more
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and more frequently. and the reason we're seeing it more frequently is that the market is changing and there is less of an allowance provided by landlord than there was when the market was softer. so as this market continues to heat up there is less advantage to a tenant. and because of that, then we have to amortize our improvement costs. the challenge we have is each one of these individual deals is have fairly small so we're not talking about a large sum of money which we would normally think of in terms of a certificate of participation, or other fiscal mechanism we might have to borrow funds at very competitive rates. so we're in a market just like any other tenant is in the market. and what landlords will charge is in this 8% range. we do our best to negotiate something lower but that's where the market stands. i've talked to -- about this concept of could we find a different mechanism to
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self-finance improvements. we have found where new york city did accomplish that, but it's on a much grander scale. so if there is the possibility perhaps to bundle properties, that might get us enough heft of what we want in debt, and perhaps get a decent return but for small agreements it's very difficult to do anything other than what we're presenting to you at this 8% rate. we are -- i do want to make mention though that our rough order of magnitude budget at this point has us considerably below what our availability of funds is at 35 a square foot, we're probably 80% of that and we're seeing already value engineering opportunities where that number will only go lower. but in abundance of caution we're providing you numbers that assume full amortization of the entire 35 a square foot. >> president chiu: supervisor
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campos. >> supervisor campos: thank you, mr. president. thank you for your presentation. just a quick question, just an informational question. there is a way to keep track of how much the city is spending on these kinds of improvements, collectively? i don't know how many of these deals we have, where we're actually, you know, paying or borrowing the money at this interest rate. but to the extent that the individual agreement, you know, is de minimus in terms of the amount, it might be useful to just keep track so that we at least can consider different ways of dealing with them collectively. >> that's an excellent idea. i'm sure we can work with the controller's office to put together a working matrix as we go forward. >> president chiu: any additional question to city staff? thank you very much. let me ask if there are members of the public that wish to speak on this item.
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seeing none, public comment on this item is closed. and colleagues, unless there is further discussion, this hearing has been held, and i will close it and file it. and we have in front of us items 9, 10, 11. why don't we -- unless there are additional comments, let's take the items in order. madam clerk, could you call the roll on item 9. >> the clerk: supervisor cohen, aye. supervisor elsbernd, aye. supervisor ferrell, aye. supervisor kim, aye. supervisor mar, aye. supervisor olague, aye. supervisor wiener, aye. supervisor avalos, aye. supervisor campos, aye. president chiu, aye. supervisor chu, aye. there are 11 ayes. >> president chiu: the resolution is adopted. item 10. >> clerk calvillo: item 10, supervisor cohen -- >> president chiu: why don't we do this same house, same call. without objection this resolution is adopted.
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item 11, same house, same call. without objection this item is adopted. madam clerk, could you please read the in memories. >> clerk calvillo: today's meeting will be adjourned in memory of the following individual, on behalf of supervisor carmen chu for the late esther -- >> president chiu: any more business in front of the body? >> clerk calvillo: that concludes our business for today. >> president chiu: thank you, ladies and gentlemen. this meath i -- meeting is adjourned.
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>> i have 2 job titles. i'm manager of the tour program as well as i am the historyian of city hall. this building is multifaceted to say the very least it's a municipal building that operates the city and county of san francisco. this building was a dream that became a reality of a man by the name of james junior elected mayor of san francisco in 1912. he didn't have a city hall because it was destroyed in the earth wake of 1906. construction began in april of 1913. in december 1915, the building
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was complete. it opened it's doors in january 1916. >> it's a wonderful experience to come to a building built like this. the building is built as a palace. not for a king or queen. it's built for all people. this building is beautiful art. those are architecture at the time when city hall was built, san francisco had an enormous french population. therefore building a palace in the art tradition is not unusual. >> jimmie was an incredible individual he knew that san francisco had to regain it's place in the world. he decided to have the tallest
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dome built in the united states. it's now stands 307 feet 6 inches from the ground 40 feet taller than the united states capital. >> you could spend days going around the building and finding something new. the embellishment, the carvings, it represents commerce, navigation, all of the things that san francisco is famous for. >> the wood you see in the board of supervisor's chambers is oak and all hand carved on site. interesting thing about the oak is there isn't anymore in the
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entire world. the floors in china was cleard and never replanted. if you look up at the seceiling you would believe that's hand kof carved out of wood and it is a cast plaster sealing and the only spanish design in an arts building. there are no records about how many people worked on this building. the workman who worked on this building did not all speak the same language. and what happened was the person working next to the other person respected a skill a skill that was so wonderful that we have this masterpiece to show the world today.
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mayor lee, supervisors, come on up. and while they are doing that, let's get started. what a beautiful, beautiful day, give yourselves a round of applause. [ applause ] >> fantastic. this is like winning a pennant and how about those san francisco giants. i actually want to marco scutaro wanna be, but it's not going to work and today i will settle formality city librarian luis herr ra and i would like to welcome each and every one of you to our ceremony today. this is indeed a milestone because it's not only the beginning of construction to a new new library, but it's the end of the program, which means it's a long time coming. {$}[ applause ], what it means
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that this is the last project and i want to especially thank. north beach community for your patience, for your persistence and your perseverance to have the state-of-the-art library here in your neighborhood. [ applause ] thank you so much very much. [ applause ] >> let's talk a little bit about this library. it's going to be 60% larger than the other library that sits over there. 60% larger. that means more books, more media, wonderful technology, wi-fi access. if you envision this space and if you look that way you have a wonderful adult area. as you walk in from the mason street side, you have an amazing teen center for all the young adults.
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absolutely. yelling back here, [ applause ] . that was our deputy city librarian, what can we say? a wonderful space for children. this north beach library serves over 30,000 diverse residents and it's way overdue to have a state-of-the-art library. clean it's really a true partnership with our city departments and i want to thank our dpw folks and their team. mindy, lena, fantastic work in managing this project. [ applause ] and another superb partner in phil ginsburg, rec and park, thank you. [ applause ] this is going to be an amazing space that ties together the joe dimaggio park and you will hear more about that. it's wonderful to know that it
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really creates an amazing civic space for north beach and it wouldn't happen wouldn't fantastic support from the community. julie christinsen, a shout out to you. [ applause ] the. so throughout this ceremony, we're going to celebrate and pay tribute to all of the wonderful folks that are making it happen. so without further ado, person that not only has prior director of public works, city administrator and now wonderful mayor for our city; who has been terrifically supportive of our city, mayor ed lee. [ applause ] >> how is everybody doing? [ applause ] [ applause ] well let me begin by saying luis, congratulations but you know, when you are as successful as you are have been with the library commission it's like winning the first world series.
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we're not just satisfied with one project, even though there are 24 of these that have been completed with this one, and the proper use of our library bonds program from beginning from the year 2000 with the great partnership of dpw and so forth. there are more great partnerships to be guilt because guess what we're doing with the bonds that publicly improves, we're honoring these kids' future. this is a place where there is going to be invent, sharing, yes, exploring, meeting, oh, gosh, what else did we miss? >> meeting. >> instructor: yes, meeting and sharing and exploring and inventing and reading. of course. we're just going to have so much of this and i'm so happy to be working with the supervisors who also know this. because we're working together
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on things that you believe in. and i'm waiting for the chance, when board president chiu and scott wiener have their kids and when they come to north beach branch library, they will remember this day, when they bring their kids up to the front and say mayor lee and luis herrera and everybody worked together to get this done. and, by the way, more is to come when we all work together. because today is about a confirmation, the biggest thanks goes to the parents and residents of north beach. ten years it took us to get to this place. a lot of ups and downs and winding and turning. [ applause ] and if it wasn't for people like julie and others, who i met years ago and we looked each other in the eye when i was at dpw and we said we're going to get this done and make
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it even a better libraries, because libraries are centers for our communities. they are seismically safe. they are going to have the most modern equipment for our kids to grow up and promise all of the things that we promised for them to do to become even better residents. the things that keeps me going and everybody else goes in collaboration, we're doing it for you. it's not about us. it's not about announcements, about things that are politically smart for us to do. it's about the future of this city. and with these 24 branches, and now the smart thing to do, connect up with great parks. yes. [ applause ] because the vision, julie didn't have a vision of just having a great center library; right? our neighborhoods aren't just going to accept that to be the end. it's to connect it up with world-class parks. that is what prop b is about
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and why we work together and mohammed comes in and smooths out columbus avenue. because i just road that street and it feels like a construction road [ laughter ] we have got to get all of these roads built and this is what scott wiener and others works on:we have the opportunity to unite everybody and it's up to us in government to have listened carefully, and be responsible with your money and get the job done. are we ready to get the job done? >> yes! are we ready to build the future for your kids? >> yes. >> are we ready to support the great parks in san francisco with proposition b? >> yes! let's go forward and keep another world series and escambia keep our san francisco successful! thank you, mr. mayor, we're going to have a celebration this morning. he reminded me it's about
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community spaces too. so take a moment and look up. look up. because that is where the meeting room will be on the second floor with after-hour access for all the poets and all the kids' story times and various activities. it's going to be fantastic. we want to continue our theme of partnerships and teamwork by acknowledging the great staff that has put it all together and it's going to continue to offer services here in the neighborhood at our current library. and i see robert carlson, robert, would you wave? he is a great community advocate here and does a terrific job. [ applause ] other members of the team, begining with our chief of branches, edward melton, edward, great work. [ applause ] elsie wong, another district manager helping to put it all together. thank you for the fantastic job you do. more partners from our city family.
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i know our attorney team john is here. congratulations for all the hard work, as well as michael. thank you for helping us through the entire environmental impact reports and all that took many, many years of dedicated work. we really appreciate that. and without further ado, terrific tenure, president of the board, district supervisor david chiu, thank you so much. [ applause ] >> thank you. >> good morning. the sun is shining on north beach today. i am so happy to be here. i think it's amazing that in the week that we celebrate the giants, we are also celebrating a real tribute to the best baseball legend in history, joe dimaggio! [ applause ]
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as our librarian just said, the very first meeting i took, even before he was sworn-in, after i was elected was about this library. and i got to tell you, that was only four years of a ten-year struggle. there have been hundreds of meetings coming together. there are high school students today who were preschool students when we started this conversation. and i have to tell you as we all know, it takes a village to raise our kids, but it has taken many villages to build this library. i want to start first and foremost by thanking three mothers, who helped to lead friends of joe dimaggio, julie christinsen, lizzy diaz and lizziehurst, thank you for all you have done. [ applause ]

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